Dish: On the Move

With 40 MHz of LTE spectrum, it would rival the networks of wireless carriers such as AT&T and Verizon. Google is just one of several companies that Dish has held talks with recently, and the discussions with other potential partners are also at an exploratory stage, said the people familiar with matter.

Content and advertising networks, such as Google, Microsoft, Apple, Amazon and Facebook, all stand to benefit with low cost (or no cost) data networking. That means they would have to buy spectrum outright or operate as wholesale Mobile Virtual Network Operators.

There are only two companies with a significant amount of spectrum available – Dish and Clearwire. Neither is a phone company. That may be the tricky bit – finding an equitable agreement.

Everyone wants in the pool, but telcos are wary of creating too much competition.

Verizon bought nationwide AWS spectrum from cable companies (SpectrumCo), and AT&T was forced to give up some of its AWS to T-Mobile after its failed merger. Then T-Mobile announced merger plans with MetroPCS which adds more AWS frequencies. Now Verizon and T-Mobile are well stocked with nearly 40 MHz of AWS spectrum, while Sprint/Softbank controls more than 100 MHz in the 2.6GHz band.

The T-Mobile/MetroPCS merger (NewCo) would have a total of 76 MHz of spectrum. Adding 40 Mhz to T-Mobile/MetroPCS brings it to 116 MHz, creating four carriers, each with around 100 MHz.

AT&T, with 100 million subs, is facing an immediate spectrum crisis. They announced plans for building out 2.3 GHz, but coverage is not nationwide. AT&T will most likely need to acquire spectrum from Dish or Clearwire.

But Charlie Ergen says Dish would prefer not to sell their wireless play. The satellite television business has peaked. The future is mobile. Data not voice.

Dish Network spent $2.9 billion acquiring bankrupt satellite companies and their 2-way frequencies in 2011, and expects to utilize them for terrestrial LTE. What Dish and Google don’t have is wireless infrastructure and experience in mobile voice.

Sprint’s filing with the FCC this week reiterated its call to shift Dish Network’s AWS-4 band up 5 MHz from 2000-2020 MHz to 2005-2025 MHz so their planned adjacent “H block” of PCS spectrum can be used for LTE. Sprint wants to use the entire 1990-2000 MHz block (two 5 MHz chunks). But that would adjoin Dish’s spectrum and cause mutual interference.

Sprint-Nextel claims that if the FCC were to limit their proposed “H Block” to only small cell use, it would not likely bid on the spectrum. Dish has argued that a “full power” H Block would cause at least 25 percent of its uplink to become unusable, a claim Sprint has said is erroneous. Sprint says it is open to hosting Dish with their Network Vision architecture – but only if Dish were bumped up 5 MHz.

Jeff Blum, senior vice president and deputy general counsel for Dish, called Sprint’s proposal a “zero-sum approach” that “does not result in net spectrum gain for the American consumer and creates no new jobs.”

“Worse yet, it takes 5 MHz of spectrum out of the hands of a new market entrant and puts it in the hands of an incumbent that already has more than 200 MHz of wireless spectrum,” Blum said. “This makes no sense at a time when the nation is enduring a spectrum crunch and would benefit from more wireless competition.

Dish applied 18 months ago to the FCC to change the 40 megahertz of spectrum from requiring dual-mode satphones to allowing cheaper LTE phones that only work terrestrially. The FCC, apparently fearing a conservative LightSquared-like backlash (somehow), will finally make a ruling on Dish’s LTE and spectrum plan by year end.

AT&T buys Dish. AT&T needs spectrum more than anyone and has the money. AT&T would have to build the infrastructure and get it approved by the feds. Dish says it would prefer a partnership, not a sugar daddy like AT&T (propped up by the iPhone). Dishes frequencies are also not international, like 1.8 and 2.6 GHz. If AT&T bought 40 MHz of 2.6 from Sprint, they could offer international roaming and iPhone access. It’s a close call. AT&T is on the ropes. Charlie Ergen is the decider.

A Sprint/Softbank MVNO. Dish’s frequencies would create internal competition with Sprint’s own wholesale business at 2.6 GHz. Sprint/Softbank might grow their wholesale business with Dish if they sold off 2.6GHz and utilized 2.1 GHz, which has better range. That solves the interference issue.

How does it shake out? AT&T with Telefónica and Microsoft buy 2.6GHz for microcell streaming video. Verizon with América Móvil upgrades Tracfone on AWS. T-Mobile with Dish and Google Wireless. Sprint/Softbank with Apple and Clearwire with Amazon and Facebook. Telefónica attempts to buy Clearwire but is repelled by Softbank.

All this is just idle speculation, of course. Something’s got to give. Mobile World Congress in February 2013 would be a good place for an announcement. That means some kind of tentative agreement should be reached by the end of the year.